Topping the list of institutions under fire are the familiar faces of Fannie Mae and Freddie Mac, the poster children for good intentions gone bad. The government entities faced renewed federal scrutiny earlier this year. What to do with the troubled HUD groups, however, is still up in the air. The issue is delayed until after the current federal bank restructuring effort is completed, which is anticipated by year-end.

Reformation is definitely on the horizon for these two lenders. The Treasury Department is considering an expansion of options on guidelines officials released in June regarding both lenders. Privatization, nationalism, hybrid strategies are all being measured for reform.

Fannie and Freddie were taken into conservatorship by the federal government last year as the financial crisis spread. Governmental control seemed inevitable. If the two were to collapse, it was thought that the damage would be irreparable and more widespread and devastating than even the Lehman Brothers' failure.

Reform is critical, since these entities provide the majority of home loans in the U.S. The U.S. Treasury Department was authorized to purchase Fannie and Freddie mortgage securities through the end of this year. Legislation is anticipated to extend the Treasury's conservatorship through the end of 2010.

Wells Fargo, the receiver of $25 billion in bank bailout money, was the primary lender on two recently shuttered businesses in Alabama. Wadley company Plantation Patterns and Anniston corporation Anniston Sportswear both filed for bankruptcy, and Wells Fargo was the primary lender for both companies. According to federal statistics and a local mayor's report, a total of more than 660 jobs were lost in both closings. Birmingham-based Meadowcraft is the parent company of Plantation Patterns. Chicago-based Hartmax Corporation is the parent company of Anniston Sportswear.
Wells Fargo's apparent refusal to work with either business brought federal scrutiny. In two separate incidents, the lender was named by over 40 members of Congress in complaints written to Treasury Secretary Timothy Geithner.

Not unfamiliar to federal scrutiny, Countrywide came under the federal microscope again last year, this time by a federal bankruptcy court official. Accused of destroying, losing or misplacing $515,000 in checks issued by homeowners, the home lender was further accused of adding inappropriate charges to the bankruptcy debt of homeowners.

Countrywide eventually worked out a deal with the court; however, the Justice Department challenged the settlement due to some unsavory terms presented by the mortgage lender. A non-disparaging clause was included, which caused the judge in the case to approve a probe of Countrywide's entire systems by the U.S. trustee.

Many mortgage lenders letting loans for reverse mortgages are now being examined under federal scrutiny. Some lenders responsible for predatory lending have now turned to high-pressure tactics and broad-yield premiums intended to rip off elderly homeowners. Michael S. Blume, U.S. Attorney, noted a dramatic increase in reverse mortgage loan numbers.

Bank of America and Wells Fargo, along with insurers like MetLife and Genworth, heavily invest in reverse mortgages worth about $17 billion annually. The FHA insures most reverse mortgages. Lenders are approved by HUD. Borrowers are required to meet with HUD-approved counselors prior to being approved for the reverse mortgage loan. New certification requirements have resulted in a reduction of counselors available nationwide, alongside an increase in the number of reverse mortgage loans.

The similarities of subprime loans to reverse mortgages are eerily similar in their predatory lending practices. Senior homeowners are strongly encouraged to avoid high-pressure sales that involve add-on products and services for reverse mortgages.

For more mortgage lenders under federal scrutiny, check out the Federal Trade Commission website at FTC.gov. You'll find formal complaints and current cases being prosecuted by the federal government.

Ki developed a website to serve Austin real estate investors. The site lets people search for homes and condos in the Austin MLS. His site has information on historical mortgage rates along with general information on Austin real estate.

While the expectation has been that mortgage rates would start to rise they have fallen for the last 2 weeks. This week the 30 year rate fell from 4.98 to 4.91 (last week it fell from 5.03 to 4.98). Besides October 8th its the lowest rate we have seen since the start of the summer. So how does 4.91 fit in with historical mortgage rates. Its lower than any point before March 26, 2009. Its also the 11th lowest recorded rate in history (all of the 10 lower recorded rates occured in 2009).

While the 30 year mortgage rate is the most watched rate the other 3 major mortgage products fell as well. The 15 year rate fell from 4.40 to 4.36. The 5 and 1 year arm fell from 4.35 to 4.29 and 4.47 to 4.46. The 1 year arm is now higher than the 5 year arm and the 15 year arm. Below are rates from the weeks from Nov 12th, 2009 to October 15th, 2009.

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Apr 23, 2009
30-yr 4.80 15-yr 4.48 5-yr ARM 4.85 1-yr ARM 4.82

At this point the 1 year arm, being higher than the 5 year arm, is out of the picture. The 5 year arm is substantially lower than the 30 year rate. But it still seems like a worse option than the 30 year mortgage. First the 30 year rate is pretty low (the 11th lowest rate in history). In addition the expectation is that rates will move up so the benefit of getting a lower rate with a 5 year arm is outweighted by locking in for a short period of time.

In addition to rates its also interesting to look at mortgage payments. We took today's rates and using a mortgage calculator determined the payment for a 200k loan. We also did the same thing with rates from October 29th and April 16.

Nov 12
30-yr $1062.66
15-yr $1515.71
5-yr ARM $988.56
1-yr ARM $1008.62

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Apr 16
30-yr $1018.12
15-yr $1574.3
5-yr ARM $1052.96
1-yr ARM $1051.74

Compared to two weeks ago a payment is 1.35 percent lower and for a 200k mortgage payment the payment is $14.65 less now than it would have been two weeks ago. While this is not a huge difference its not totally insignificant.

So what is our advice to people currently looking to get a loan? With rates near historical lows its probably a good idea to lock in rates earlier rather than later. While their is a chance that rates could move lower its doubtful they could fall too much lower than where they stand today. On the other hand there is more of a risk of mortgage rates moving up in the next few weeks.

Ki lives, and works, in Austin, Texas. He maintains a website escapesomewhere.com for future buyers of Austin real estate. The site offers information on historical mortgage rates along with a mortgage rate widget.

So are sub 5.0 rates gone forever? The short answer is probably yes. While rates might briefly fall below 5 in the next month for the most part the era of sub 5.0 rates is over. Mortgage rates rose for the third straight week. The thirty year rate rose from 5.00 to 5.03. The 15 year rate rose from 4.43 to 4.46. The 5 and 1 year rates rose from 4.40 to 4.42 and 4.54 to 4.57. Its interesting to note that the 1 year arm has had a higher rate than the 5 year arm for the last few weeks. Below are rates for the last few weeks.

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Apr 02, 2009
30-yr 5.05 15-yr 5.13 5-yr ARM 5.00 1-yr ARM 4.78

The only two mortgage products that are interesting is the 30 year and the 15 year fixed rates. With 1 year rates higher than the 5 year arm they are obviously pointless. And with current rates low compared to historical mortgage rates the lower rates of the 5 year arm (compared to the 30 year rate) don't seem worth the risk. In addition to mortgage rates lets look at mortgage payments. Taking today's rates we can translate them into a payment for a 200k mortgage. We did the same thing with rates from October 15th (2 weeks ago) and April 2 (6 months ago).

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28

Apr 02
30-yr $1079.76
15-yr $1595.16
5-yr ARM $1073.64
1-yr ARM $1046.91

A mortgage payment is about $13 more than 2 weeks ago and about $2 less than it was six months ago.

So why are rates rising? Although its a weak recovery, the economy by most accounts is experiencing a recovery. In addition, the government has lowered the amount of mortgage backed securities it was buying which was keeping rates artifically low.

So what is our advice to people interested in buying a house? It might seem obvious but I would lock in now instead of waiting. Almost all signs point to mortgage rates rising over the next few months. The real question is will the strengthing real estate market be able to withstand higher rates? We will have to wait to find out.


Ki writes frequently about the mortgage industry and mortgage rates. He caters to the real estate market in Austin. His site www.escapesomewhere.com www.escapesomewhere.com has information on historical mortgage rates along with a free mortgage widget.

Mortgage rates remained steady this week. The 30 year again was at 5.04 which is a low for the summer. The other mortgage products remained relatively stable this week except for the 1 year arm which fell from 4.58 to 4.52. Below are rates for the last few weeks. As we can see overall for the last month rates have been steadily falling. But overall the movement has been very small with 30 year rates only dropping 1/10 of a point in the last month.

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Aug 27, 2009
30-yr 5.14 15-yr 4.58 5-yr ARM 4.67 1-yr ARM 4.69

Feb 19, 2009
30-yr 5.04 15-yr 4.68 5-yr ARM 5.04 1-yr ARM 4.80

In addition to rates we like to look at mortgage payments to provide some perspective. We determined mortgage payments for a 200k loan based on today's rates and rates from September 10th and February 19th.

Sep 24
30-yr $1078.53
15-yr $1525.9
5-yr ARM $1014.55
1-yr ARM $1015.74

Sep 10
30-yr $1082.21
15-yr $1529.98
5-yr ARM $1014.55
1-yr ARM $1030.07

Feb 19
30-yr $1078.53
15-yr $1548.44
5-yr ARM $1078.53
1-yr ARM $1049.33

This kind of shows the same thing in that there has not been a lot of movement in mortgage rates. A payment two weeks ago would be $3.68 more a month (or 0.3% percent more).

Its also interesting that rates are exactly where they were six months ago. Of course six months ago mortgage rates were more newsworthy because at the time 5.04 (for a 30 year mortgage) was an all time low. So although 5.04 is no longer an all time low (rates dropped below 5 in April) and we are not seeing as many stories in the news mortgage rates are still very, very low by historical standards.

The two questions of course are why mortgage rates are not moving, and how long they will stay this low. The expectation is that eventually mortgage rates are going to move up. Some have suggested that mortgage rates could move above 10 percent in a year or two. The idea is that once the economy recovers mortgage rates (along with inflation) will start marching upwards due to the massive government spending during the recession. It seems that although the economy is recovering its doing so rather slowly and this is helping keep mortgage rates down for now. The other question is how long mortgage rates will stay down. My expectation is rates will probably not see that much movement until we see movement in the economy. Once the economy starts moving we should see rates start to move upward.


Ki bikes Shoal Creek when he is not working. He has focused on Austin real estate since graduating. People interested in the Austin market can perform a graphical Austin home search on his site. His site also has a graph of historical historical mortgage rates along with a mortgage rates widget.

Mortgage rates rose again this week. This is the third time in the last 4 weeks that mortgage rates have risen. Why are mortgage rates rising? There are numerous factors at play but generally once the economy recovers it's expected that inflation, and mortgage rates, should rise. The last month of generally positive economic news has probably helped nudge mortgage rates up. Although rates are increasing they are increasing in small steps and not large strides. Since July 16th the 30 year rate has only moved from 5.14 to 5.29. While this is interesting it's certainly not a huge move upward. What is interesting is that the current (small) upward movement in mortgage rates might be the beginning of the rise that many in the financial industry have predicted. If the economy continues to rebound this could be the beginning of mortgage rates steadily moving up to 10% or higher. This is of course dependent on the continued movement of the US economy out of the current recession. While the government has made some statements about curbing inflation it seems more concerned with making sure the US exists the recession. Of the 4 major indexes 3 moved up this week. The 30 year note rose from 5.22 to 5.29, the 15 year mortgage rose from 4.63 to 4.68 and the 5 year arm rose from 4.73 to 4.75. The 1 year arm fell from 4.78 to 4.72. What is also interesting is that when rates were at their lows a few months ago the 5 and 1 year arm was higher than the 30 year fixed rate, which is highly abnormal. Since the 30 year rate has gone up (and the arms have stayed down) the 30 year rate is now above both arms. And now the spread between the 30 year rate and the arms is back to normal. Below are the rates for the different mortgage products for the last few weeks and for January 15 (6 months ago). Aug 13, 2009 30-yr 5.29 15-yr 4.68 5-yr ARM 4.75 1-yr ARM 4.72 Aug 06, 2009 30-yr 5.22 15-yr 4.63 5-yr ARM 4.73 1-yr ARM 4.78 Jul 30, 2009 30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80 Jul 23, 2009 30-yr 5.20 15-yr 4.68 5-yr ARM 4.74 1-yr ARM 4.77 Jul 16, 2009 30-yr 5.14 15-yr 4.63 5-yr ARM 4.83 1-yr ARM 4.76 - - - Jan 15, 2009 30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89 In addition to rates it's always interesting to look at actual mortgage payments. We took today's rates and using a mortgage calculator translated them into a payment for a 200k mortgage. We also did the same thing with rates from July 30, 2009 (2 weeks ago) and January 15, 2009 (6 months ago). Aug 13 30-yr $1109.36 15-yr $1548.44 5-yr ARM $1043.29 1-yr ARM $1039.68 Jul 30 30-yr $1104.4 15-yr $1549.47 5-yr ARM $1043.29 1-yr ARM $1049.33 Jan 15 30-yr $1068.75 15-yr $1545.36 5-yr ARM $1104.4 1-yr ARM $1060.23 As we can see that while rates have risen the effect on a mortgage payment (looking at the 30 year fixed rate) is relatively small. So what is our advice to potential buyers looking for a mortgage? I would start the process of looking for a lender/mortgage early on. Financing is stricter than it has been in the past and its good to start the process early so any potential problems can be resolved (i.e. credit report problems or extra documentation that is needed). Additionally, with a possible spike in inflation looming there is more of a risk of rates rising than falling so it makes sense to lock in early.

The saying "No news is good news" might be applicable with the recent trend with mortgage rates. For the last 2 or 3 weeks for the most part rates have stayed pretty much unchanged. The reason why this could be considered good news is that the economy and stock market seem to be improving. There was a lot of discussion that an improving economy would lead to inflation and in turn higher interest rates. While I still think we are eventually headed to higher interest rates it's nice that at least that is not happening now. This week the 30 year mortgage rate dropped from 5.25 to 5.22. We also saw the 15 year rate drop from 4.69 to 4.63. The 5 year arm and 1 year arm both dropped .02 points this week (4.75 to 4.73 and 4.80 to 4.78 respectively). Below are rates for the last few weeks and from January 15th (6 months ago).

Aug 06, 2009
30-yr 5.22 15-yr 4.63 5-yr ARM 4.73 1-yr ARM 4.78

Jul 30, 2009
30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80

Jul 23, 2009
30-yr 5.20 15-yr 4.68 5-yr ARM 4.74 1-yr ARM 4.77

Jul 16, 2009
30-yr 5.14 15-yr 4.63 5-yr ARM 4.83 1-yr ARM 4.76

Jul 09, 2009
30-yr 5.20 15-yr 4.69 5-yr ARM 4.82 1-yr ARM 4.82

Jan 15, 2009
30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89

Looking above the 30 year mortgage rate has only moved from 5.14 to 5.25 in the last month which is remarkably stable considering the changes in the economy and the mortgage industry. Rates are still higher than what we saw six months ago but the change is not huge. To illustrate this let's look at changes in actual mortgage payments. Using our free mortgage calculator we took today's rates and translated them into a payment for a 200k loan. We did the same thing with rates from July 23 (two weeks ago) and rates from January 15th, 2009 (6 months ago).

Aug 06
30-yr $1100.69
15-yr $1543.3
5-yr ARM $1040.88
1-yr ARM $1046.91

Jul 23
30-yr $1098.22
15-yr $1548.44
5-yr ARM $1042.08
1-yr ARM $1045.7

Jan 15
30-yr $1068.75
15-yr $1545.36
5-yr ARM $1104.4
1-yr ARM $1060.23

From two weeks ago we are see a change of $2.47. This is pretty insignificant. When mortgage rates first started dropping we saw a difference of $35 from one week to the next running this same calculation. Compared to 6 months ago we see a rise of $31.94 or 2.98 percent. Considering the time frame this is still a relatively small change.

First off what is my advice for people looking for a home and a mortgage? I would still avoid arms. Nothing has changed basically arm's offer a small benefit right now but with most experts predicting higher rates in the future it makes sense to look in for a longer period of time with a 30 year fixed mortgage. What is our prediction moving forward? Long term I would expect rates to move up perhaps to 10 percent or more. In the short term I have been saying that it's hard to know. Know with the economy improving I would expect to see higher rates than what we are currently experiencing a month from now. That is assuming the economy doesn't start sliding backwards.


Ki lives and works in central Texas. His website covers the Austin Texas real estate market. It also has information on historical mortgage rates along with a mortgage rates widget

Mortgage Rates Widget Historical Mortgage Rates

Mortgage rates on 30 Year Arms and 15 Year Arms jumped up this rate. 30 Year Mortgage Rates went from 5.98 to 6.08 and 15 Year rates went fom 5.55 to 5.66. Rates on 5 and 1 year ARMS remained relatively unchanged.

May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22

May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24

May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18

May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29

May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29

So using our free mortgage calculator lets see what these numbers translate into for a 200k mortgage.

May 29th
30-yr $1209.4
15-yr $1651.19
5-yr ARM $1150.68
1-yr ARM $1167.36

May 22th
30-yr $1196.53
15-yr $1639.47
5-yr ARM $1149.41
1-yr ARM $1103.16

Since the FED has signaled that they are not going to continue to cut rate I expect rates to go higher over the course of the summer. Here are rates over the last few weeks.

Ki is a realtor working with investors in the Austin real estate market. He provides visitors a graphical search of the Austin MLS and updated commentary on the market on his Austin real estate blog.

Mortgage Interest Rates Historical Mortgage Rates

Mortgages rates fell this week for 30 Year loan (6.01 to 5.98) and 15 year rates (5.6 to 5.55). Rates on 5 and 1 year arms increased (5.57 to 5.61 and 5.18 to 5.24) respectivly. Another interesting point is that 30 Year rates have now fallen for 4 weeks in a row which is an encouraging sign although it would be nice to have seen rates fall a little more.

May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24

May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18

May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29

May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29

So what would these rates translate into for a mortgage. Using our free mortgage calculator lets run some numbers.

Using our free mortgage calculator lets run the numbers on a 200k Loan

May 15th
30-yr $1196.53
15-yr $1639.47
5-yr ARM $1149.41
1-yr ARM $1103.16

May 15th
30-yr $1200.38
15-yr $1711.46
5-yr ARM $1144.37
1-yr ARM $1095.75

At this point I would still favor a 30 Year loan over an arm. But getting an arm over a 30 Year arm you would only save $47.12 which considering rates will probably be higher when the loan resets does not really seem worth it.

Ki works with buyers and sellers in the Austin real estate market. His site has a free search of the Austin MLS along with information on his Austin real estate blog.

Mortgage Interest Rates Historical Mortgage Interest Rate

Here is a breakdown for the last few weeks.

May 15, 2008
30-yr 6.01 15-yr 5.60% 5-yr ARM 5.57 1-yr ARM 5.18

May 8, 2008
30-yr 6.05 15-yr 5.60% 5-yr ARM 5.67 1-yr ARM 5.29

May 1, 2008
30-yr 6.06 15-yr 5.59% 5-yr ARM 5.73 1-yr ARM 5.29

April 24th, 2008
30-yr 6.03 15-yr 5.62% 5-yr ARM 5.68 1-yr ARM 5.29

So what would these rates translate into for a mortgage. Using our free mortgage calculator lets run some numbers.

Using our free mortgage calculator lets take a look at what the mortgage payment would be for a 200k loan. The mortgage payment is $1.29 less than what it would have been last week. Considering that the FED cut rates I was a little dissappointed. I was hoping for rates to drop a little more this week.

May 15th
30-yr $1200.38
15-yr $1711.46
5-yr ARM $1144.37
1-yr ARM $1095.75

May 8th, 2008
30-yr $1205.53
15-yr $1711.46
5-yr ARM $1157
1-yr ARM $1109.36

Ki helps clients in the Austin real estate market. His site has a free search of the Austin MLS along with information on his Austin real estate blog.

Mortgage interest rates remained relatively unchanged for the second week in a row.

Mortgage Interest Rates Historical Mortgage Rates

(to post the above widget on your site go to
www.escapesomewhere.com/rates.html)

April 10th, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.56 1-yr ARM 5.19

April 3rd, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.59 1-yr ARM 5.18

March 27th, 2008
30-yr 5.85 15-yr 5.34% 5-yr ARM 5.67 1-yr ARM 5.24

So what is going on? The FED has been attempting to stimulate the economy by cutting the FED Funds rate. But the first few times the fed cut rates in 2008 banks did not respond by lowering mortgage interest rates. Since this is one of the main tools the FED uses to influence the economy and mortgage rates this was a cause for concern. If the FED losing its influence over mortgage rates would be another negative factor weighing on an already weakened economy. In the beginning of March their were some pronouncements from analysts that we should expect more FED rate cuts but we should not expect to see lower mortgage rates.

But then after the latest fed cut on March 18th mortgage rates fell from 6.13 to 5.87. So what has happened since then? Basically, in the absence of further rate cuts by the FED, mortgage rates have remained relatively constant. In the midst of lots of bad news for the national real estate market this is actually a good sign that banks are apparently happy with the spread between the fed rate and mortgage rates. Hopefully future fed cuts (and it seems apparent at this point the fed will continue to cut rates) will result in lower mortgage rates.

Ki works as a realtor in Austin. He runs a site about Austin real estate which provides a free search of the Austin MLS and a free mortgage calculator.